Read text of Announcement 2013-14 in IRB 2013-11 [PDF 1.65 MB]
Fiscally transparent entities
The Competent Authority agreement (signed in December 2012 and released to the public on January 31, 2013):
- Clarifies the eligibility of entities that are treated as fiscally transparent in either country for benefits under the United States-Norway income tax (1971) and Protocol (1980)
- Provides the procedure for U.S. fiscally transparent entities to claim treaty benefits from Norway
Under the Competent Authority agreement, the treaty terms “resident of Norway” and “resident of the United States” include a partnership, estate, or trust to the extent the income derived by such entity is subject to tax in Norway and in the United States, respectively, as income of a resident.
The Competent Authorities agree that in applying Article 3 (Fiscal Residence), income from sources within one of the Contracting States received by an entity, wherever organized, that is treated as fiscally transparent under the laws of either Contracting State will be treated as income derived by a resident of the other Contracting State to the extent that such income is subject to tax as the income of a resident of the other Contracting State. For an entity to be fiscally transparent, the income subject to tax in the hands of the resident must have the same source and character as if the income were received directly by the resident.
The Competent Authority agreement sets out definitions of what are fiscally transparent entities (including disregarded entities such as an LLC in the United States) based on the tax treatment of such entities in the United States or Norway. For U.S. tax purposes, a fiscally transparent entity includes any entity treated as a partnership, a “disregarded entity” (an entity such as an LLC that is disregarded as an entity separate from its single member owner), a subchapter S corporation, a “grantor trust” described in section 671 of the Code, et seq., and a common trust fund within the meaning of section 584 of the Code.
Procedure to claim treaty benefits from Norway
Regarding the procedure for U.S. fiscally transparent entities to claim treaty benefits from Norway, an entity, wherever organized, that is treated as fiscally transparent for U.S. federal tax purposes and that has a U.S. resident member, partner or owner, may claim treaty benefits from Norway on behalf of the U.S. resident by providing the Norwegian withholding agent with a U.S. residency certification that identifies the names of the fiscally transparent entity and the U.S. resident.
An entity (wherever organized) may obtain a certificate of U.S. residence on Form 6166 on behalf it its owner (s), by submitting a request for certification on Form 8802, Application for U.S. Residency Certification, to the IRS.